The Masters of the Universe like to talk about our “consumer economy,” as if we have discovered the equivalent of the perpetual motion machine: an economy that can prosper while consuming, without having to produce anything except fast food and loan documents. Such an economy has the future of a snake that has swallowed its own tail — that full feeling is not going to last. Such an economy is not a “consumer” economy — that is almost an oxymoron — but a consumptive economy, which is to say one suffering from a wasting disease.
People trapped in a burning building don’t spend much time worrying about whether they have a wasting disease. So it’s understandable that with the American oil revolution imploding and the stock market reeling drunkenly along the edge of a cliff, not much attention is being paid to the spreading dry rot of ordinary American retail business. Still, it’s there.
Familiar brands, friendly to and beloved of the American middle class, are going the way of — well, the way of the American middle class: Sears. J.C. Penney, Kohls, Radio Shack, Target, and many more — are announcing store closings and layoffs on a regular basis. Sears, perhaps the most iconic, lost $300 million last year and is accelerating its store closings, with 235 now on the chopping block. Masters of the Universe immediately brightened to bullish on Sears because of all the real estate the company now has for sale (remember the thing about the snake, and the full feeling not lasting? Or the guy who is burning the siding from his house in his fireplace to stay warm?).
This wasting disease does not affect only the elderly. Preppy young things such as Wet Seal (teen clothes – bankrupt, 338 stores dark, 3,700 laid off), C. Wonder (preppy stuff, gone, 11 stores), and Aeropostale (75 stores closed, 75 more doomed) are sinking to their knees. Target — okay, more middle-aged than preppy, now — just closed all 133 stores in Canada and laid off 17,000 people. (For a list of all the US stores whose closings in 2015 have so far been announced, go here.)
In addition, the country is becoming littered with closed and rotting shopping centers — abandoned cathedrals of the Consumer Church of America. Once the acme of civilized middle class life, the cultural center-of-mass for two generations, malls are creatures of suburbia, and proliferated with it after World War II. Once built at a rate of 100 per week, there hasn’t been a major new one built in America since 2006. Those that remain have become increasingly irrelevant — and insolvent.
Veteran retail consultant Howard Davidowitz expects as many as half of America’s 1,000 or so malls to fail within 15 to 20 years. He predicts that only the 400 upscale shopping centers with anchors like Saks Fifth Avenue and Neiman Marcus will survive. But midmarket malls, he says, are “going, going, gone.”
What is the reason for what is becoming a mass extinction? Did Internet online sales strike like an asteroid and suck all the oxygen out of big box stores? Well, the Internet accounts for about 13% of retail sales now, hardly a crippling blow. Is it, then, a mass migration of people from the suburbs to the center cities, leaving the malls stranded in a depopulated wasteland? Hardly. A sudden, massive change in tastes? No, that’s not it.
Consultant Davidowitz knows the answer. “This isn’t rocket science,” he says. “What’s going on is the customers don’t have the fucking money.”